I personally am a bit nervous after growing up listening to my parent talk about the great depression.
Any one else concerned? I am a bit more than concerned. It seems awful scarry to me.
Credit marketersAllan
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not2serious |
Are you afraid of a credit meltdown |
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It is all over the wallstreet Journal, the news, USA today that the morgage companies are suffering a melt down. It is now affecting the whole world, and more and more financial areas.
I personally am a bit nervous after growing up listening to my parent talk about the great depression. Any one else concerned? I am a bit more than concerned. It seems awful scarry to me. Credit marketersAllan |
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jimmiller46 |
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The huge difference between now and the Great Depression is the knowledge of how the money supply affects economic activity. In the 1930's the guiding principle of business was "sound money". So when the stock market was roaring the Federal Reserve started reducing the supply of money in the economy,actually leading to the crash of '29. Think of how the economy would be with no money at all. The Fed eventually reduced the money supply by 25-30% before it was all over. Guess what? the GNP fell by 25-30% when the economy hit its nadir..
Since then the Fed and other central banks have learned that in a difficult situation the proper approach is to supply additional money to the economy. That's what they did in the Crash of '87, at 9/11,in anticipation of Y2K,and many other times.. The Fed and the European Central bank have been jointly injecting large amounts of money into the economy since last week. They will continue to do so if they think it is necessary. Rather than worrying you should look at this as an opportunity to buy a home, get into the market,whatever. You may have to pay up for a mortgage but you will get the home at a good price and you can always re-finance later when conditions ease up. Things could get worse before they get better,but nobody knows. So don't over-commit. |
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Downpuppy |
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Wednesday we should get an idea of how many hedge funds are going down this month.
In the meantime, banks in Germany, Coventree in Canada, Barclays in England & a huge cast of US mortgage companies are running into trouble. This one has a long way to run. |
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jimmiller46 |
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As I said,it may get worse before it gets better. In fact,the S&P500 is only down to the level where it was last April. Not much of a correction,nothwithstanding the excitement.
Nobody knows what will happen,if they do they're not telling. I'm just saying to the op that management of the economy is a lot different than it was during the Great Depression. |
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not2serious |
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History repeats itself, regardless of man's knowledge or intentions.
Buy and hold gold and silver Allan |
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MLEVIN1220 |
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I heard that those who did not sell in '29. (Mostly because they bought their stocks for cash and not for margin and weren't forced to sell at margin call) well, they only had a paper loss and within a few years were back where they originally were.
Please keep in mind that there is a finite amount of money in the world. So, if someone loses money, then someone else is gaining it. No one talks about what happened to all the money that people lost in '29? Where did it go? Who profitted from it? |
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jimmiller46 |
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Money can disappear. It is not a zero sum game.
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MLEVIN1220 |
Are you afraid of a credit meltdown | ||
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Let me list some of the people who made a killing in '29.
1. Stock exchange Floor Specialists. In those days they made commission money for both buying and selling stocks. Even if they made one penny per transaction, their net worth significantly increased on that day. 2. Stock brokers. They work on commission and they made money off every trade that they initiated. 3. Those who ended up buying cheap stocks at the end of the day. Because whenever stock prices fall on the other side of each sell there is a buy. 4. Those who sold short prior to the collapse. |
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Downpuppy |
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Today was a very quiet day for a market down 1.5%.
Tomorrow should be a big news day. Not much chance that much of it will be good. |
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jimmiller46 |
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Today's Wall St. Journal mentions that insider buying by corporate executives is at the highest it has been for a long time. Also, a large number of equity-reit's are buying back stock in large amounts.
It's always very easy to go with the crowd-panic when the crowd panics, go crazy when the crowd goes crazy. The people who make big money over the long haul are the people who know when to buy,when not to. |
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